December economic index misses 2008 peak by a fraction

Business and household general spending recovers from downturn of 2009.

Lubbock Economic Index figures released Tuesday indicate the local economy finished December less than one percentage point away from its record peak in September 2008.

Key contributions to the improvement: significant year-over-year increases in general and record auto sales as well as the construction and housing industries, along with increased inflation-adjusted taxable spending and estimated payroll employment, a low unemployment rate and declining inflation.

General household and business spending in Lubbock fully recovered from the 2009 downturn, and has moved into record territory, said James Arnold, vice president of Lubbock National Bank.

Arnold announced the figures at a press conference held at Lubbock National Bank's 1001 Main St. branch.

Finishing December at the highest level in four years, the index rose 7.3 percent from the same month the previous year, continuing the strong, steady economic recovery Lubbock has experienced for the past 16 months.

Lubbock auto sales posted a record high fourth quarter sales total, up 21 percent compared to the same time period of 2011, while year-end sales of new and used vehicles increased 19 percent for 2012.

“The residual effect of the oil and gas activity in the Cline Shale and Permian Basin regions has spurred growth across the area, and contributed to a robust economy for not only those areas, but Lubbock, as well,” Arnold said.

Construction activity was up by more than 55 percent in 2012, posting the highest annual totals since 2008, as reflected by building permit valuations.

Up more than 80 percent from a year ago, the 2012 dollar valuation of fourth quarter building permits was the highest since 2006.

“These numbers substantiate recent trends of the local housing and construction industries,” said Tony Privett, legislative consultant for West Texas Home Builders Association. “Lubbock has been well served by every sector of these industries.

“Local builders, developers and lenders have worked diligently ensuring the local market does not experience many of the issues experienced by other areas,” he added.

Despite improving over 2011, with 652 total housing construction permits in 2012, housing construction is still depressed compared to years 1998 to 2010.

Regardless, the 30 percent increase is encouraging and contributed to the overall health of the index, according to information released by Arnold.

“While the local market slowed after the 2008 economic downturn, consistently strong banking practices and conservative building and developing rates helped Texas avoid many of the pitfalls affecting other states, such as a major housing bubble or flooded market,” Privett said.

Existing home sales closings continued to climb throughout 2012, outpacing 2011 by 18 percent.

Prices continued to strengthen, with the 2012 fourth quarter sales price up 6.4 percent from the same time frame a year earlier, and 3.8 percent above the 2011 annual average.

“All economic factors show a very positive growth trend,” Arnold said. “Our housing market, at less than four months inventory, is a very hot market.”

Compared to December 2011, estimated payroll employment was down by about 1,800 jobs in December, with the government sector losing about 1,600 jobs.

Local unemployment fell to 4.7 percent in December, the lowest in four years and down from 5.4 percent at 2011's year-end, and from a peak of 7.3 in June 2011.

Taxable spending per fourth quarter sales tax receipts posted an 8 percent increase over fourth quarter 2011. General real spending was up 6.2 percent compared to 2011 for 2012 as a whole.

After a solid year, all factors are lining up for the growth and improvement seen in 2012 to continue throughout 2013, Arnoldsaid.

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Lubbock Consumer price index

Dropped to 2 percent in December from 2.2 percent in November, and down from 4.5 percent in December 2011

Food/grocery sector declined from 2.2 percent in November and 4.5 in December 2011 to 2 percent last December.

Housing portion rate of change stayed at November rate of 3.1 percent

Energy/utilities rate of year-over-year price increase declined from 2.5 percent in November to 2.2 percent in December

The health care sector decreased from 3.7 percent in November to 3.5 percent in December.